NEW YORK ( TheStreet) -- Dolan (NYSE: DM) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its increase in net income, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Professional Services industry. The net income increased by 87.4% when compared to the same quarter one year prior, rising from $5.53 million to $10.36 million.
- The gross profit margin for DOLAN CO is rather high; currently it is at 55.40%. Regardless of DM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, DM's net profit margin of 14.50% compares favorably to the industry average.
- Net operating cash flow has decreased to $17.81 million or 12.68% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Professional Services industry and the overall market, DOLAN CO's return on equity is below that of both the industry average and the S&P 500.
-- Written by a member of TheStreet Ratings Staff